Small Filers Exemption

We fall under the new Small filers Exemptions. For the first half of the year we collected all the new HMDA new fields. Now that we fall under the exemptions, are we too keep the information we collected at the beginning of year? do we report those loans with the new information data fields?

If you are exempt, you are exempt for the entire year, regardless of what you may have gathered. Can you voluntarily report - sure. Will that data be subjected to criticism for accuracy - yes.

In other words, you have the option to report any exempt data you want to, even the data that was collected in early 2018 that was required to be collected at that time. The CFPB's executive summary made it clear that data collected before May 24, 2018 either 1) can be excluded from the LAR or 2) can be voluntarily reported.

" An insured depository institution or insured credit union that is eligible for a partial exemption for a transaction does not need to collect exempt data points on or after May 24, 2018. In addition, such institutions are not required to report certain data that may have been collected on or before May 24, 2018. For example, if an insured depository institution is eligible for a partial exemption for its closed-end mortgage loans and the institution collected data for its closed-end mortgage loans prior to May 24, 2018, the institution is not required to report in 2019 any data covered by the partial exemption for its closed-end mortgage loans. As discussed above, however, an insured depository institution or insured credit union may opt to voluntarily report data that are covered by a partial exemption."

That said, and as Randy pointed out, any data you report could be subject to criticism. While the regulators have all said they plan to take it easy during HMDA exams covering 2018 data, the extra data could have unexpected consequences during a fair lending exam. Therefore, many exempt reporters are are choosing to not include any exempt data, even that which was collected prior to May 24, 2018 and the law change.

To further explain this, here are a few Q&As I included in my training program on this topic:
Q3: If we now qualify for the partial exemption, do we have to report all data points for applications that had an action date prior to May 24, 2018, which was the date the EGRRCPA became law?

A: The CFPB interpretive rule gives financial institutions a choice regarding applications and originations with action dates prior to May 24, 2018. The first option is to report all 48 fields for all loans reported in 2018. The second option is to utilize the partial exemption for all loans reported in 2018. Finally, financial institutions also have a choice to report some loans with the partial exemption but to report others with non-required fields. When a financial institution reports voluntary data points, they must include all data fields within a data point for a particular transaction being reported. For example, if a partially exempt institution reports the data field of a street address - which is part of the property address data point - the financial institution must report all other data fields that are part of the property address data point for that transaction.

Q5: I really don’t want to undo everything I already have for 2018 and think it will be easier to just finish out the year and report all 48 data fields in 2018. What are the risks associated with reporting exempt data fields in 2018 and not beyond, and will examiners have a problem with that.

A: The examiners should not have a problem with this as you would be voluntarily reporting, which is completely acceptable. Additionally, the examiners have said that they do not intend to assess civil money penalties during the first year of review of the new data, which would keep your HMDA risk relatively low. Fair lending risk, on the other hand, could actually be increased. The reality is that you would be handing your examiners extra information that could be used against you during a fair lending exam. Therefore, you should consider your risks in voluntarily reporting extra HMDA data for 2018 and beyond.

I talked with a client yesterday that uses a HMDA vendor (don't recall who exactly). He said they have all of the data collected and the vendor allows them to indicate they are a small filer. The exempt data is then reported as "exempt" or "1111" automatically. IOW, all of the data is still there but will not be submitted.

For the data already collected, this seems to be the best choice (to me). Now you can decide if you want to continue to collect the exempt data for your own purposes.

Some are of the opinion that having the "extra" data and not reporting it (in other words having two LARs: the one you completed with all the data and the one with the 1111 and EXEMPT entries) can be helpful in doing in-house fair lending analysis, or for short-cutting the examiner's digging into your files to find the info you "hid" in the official filing.

Others just don't want the data in the report format at all.

Chacun à son goût!

Chacun à son goût!

no doubt!